My uncle, though catholic, married a non-catholic in a non-catholic church without a dispensation; he also did not promise to have children raised in the Faith.

He obtained a civil divorce and later fell in love with a catholic woman. Both wanted to be married and to practice their Catholic faith.

However, a priest required what they thought was an outrageous fee for an annulment (about $500 I recall). Unfortunately, this was a turn-off for them and they have since been married outside the church.

My first question is why is a fee required for an annulment?
Secondly, why should an annulment be required when my uncle was never married in the church to begin with?
And finally, what steps could they take to come back into the church as a married couple?

In his book Annulments and the Catholic Church, canon lawyer Edward Peters states, “First and most commonly, there are the basic petition fees payable to the tribunal. This is what most people refer to when they talk about the cost of an annulment. In the U.S. most tribunals charge anywhere from $200 to $1,000 for adjudicating a standard nullity case… These fees are typically payable over time, and there are means for having fees reduced or eliminated in cases of financial hardship (canon 1464)” (p. 7-8).

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Secondly, why should an annulment be required when my uncle was never married in the church to begin with?

Since your uncle attempted marriage, even though outside the Church, that marriage must be officially declared null before he can legitimately attempt marriage again. However, since your uncle’s first marriage appears to be invalid due to an obvious defect of legitimate form, he may be eligible for an expedited and much less expensive process. Peters explains, The fee for “documentary cases” (that is, cases eligible for the expedited process provided for by canon 1686) is usually much less, $25 or less being common” (p. 8).

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And finally, what steps could they take to come back into the church as a married couple?